A bipartisan Senate bill would require the federal government to cover some expenses if terrorists attack a city.
Sens. Charles Schumer (D-N.Y.), Dean Heller (R-Nev.), Mark Kirk (R-Ill.) and Jack Reed (D-R.I.) announced Thursday that they have drafted a reauthorization of the Terrorism Risk Insurance Act (TRIA), which provides federal insurance against losses from terrorist attacks that could bankrupt a city.
“Redevelopment and economic growth should be encouraged in New York and other high-risk areas across the country, even in the face of unfathomable terrorist events,” Schumer said. “And I will work with my colleagues to get TRIA passed this year to preserve this essential tool.”
The current program expires at the end of the year and their bill would extend the program for seven years.
“The Terrorism Risk Insurance Act helps enhance our nation’s financial security, and as such, reauthorizing TRIA is absolutely the right thing to do,” Reed said. “This is not only a matter of economic security, it is also a matter of national security.”
The senators said their legislation would also make two changes to the current program. Currently, the federal government covers 85 percent of insurers’ losses, but this bill would increase an insurers’ co-pay from 15 percent to 20 percent — that would be phased in over five years.
The other change, increases the mandatory recoupment threshold from $27.5 billion to $37.5 billion, meaning if an insurers’ losses are under $37.5 billion the government is required to recoup its TRIA payments.
The TRIA program was created after 9/11 because insurance companies weren’t covering losses due to acts of terrorism because it was too unpredictable and high-risk. Lawmakers say the TRIA program has now enabled private insurance companies to cover those high-risk large structures, such as stadiums and airports, in the event of a terrorist attack because the government will help.